7 January 2020
PDF version [344 KB]
Geoff
Gilfillan
Statistics and Mapping
Executive
summary
- Just under 5 million people worked for small businesses in June
2018 which was equivalent to 44 per cent of all people employed in selected
industries in the private sector.[1]
- Small businesses accounted for 34 per cent of Industry Value Added
(IVA) and 29 per cent of all wages and salaries paid in selected industries of
the private sector in 2017-18.
- IVA generated by the small business sector has increased from
$335 billion in 2012-13 to $414 billion in 2017-18 which is equivalent to
growth of $79 billion or 24 per cent.
- Employment growth in small businesses accounted for just under 60
per cent of total employment growth in the private sector between June 2013 and
June 2018.
- The Australian Capital Territory, New South Wales, Victoria,
Tasmania and Queensland all recorded strong growth in small business employment
between June 2013 and June 2018. In contrast, Western Australia, the Northern
Territory and South Australia all recorded contractions in small business employment.
- The private sector accounted for close to 97 per cent of all jobs
filled nationally in the 12 months to September 2019.
- Small businesses accounted for 57 per cent of jobs growth (as
distinct from growth in employed persons) between 2012-13 and 2016-17.[2]
- Total jobs in Australia increased by just under 1.3 million or 8
per cent in this period.
- There were around 5.6 million jobs held throughout the year in
the small business sector in 2016-17 which represented just under 32 per cent
of the 17.6 million jobs held in Australia in the combined private and public
sectors.
- Growth in median employment per job between 2012–13 and 2016–17
was highest for firms employing fewer than five employees (at 2.9 per cent per
annum). In contrast, median employment income for employees of large firms grew
at an annual average of 2.1 per cent.
Contents
Executive summary
Introduction
What is a small business?
Industry scope of the ABS survey
Key findings
Small business contribution to
Australian private sector employment
Chart 1: small business employment in
Australia—2009 to 2018
Table 1: change in employment in
small, medium and large businesses—June 2009 to June 2018
Chart 2: composition of private sector
employment in Australia by firm size
Small business employment by state and
territory
Chart 3: small business share of total
private sector employment—June 2018
Table 2: small business employment by
state and territory—June 2013 and June 2018
Chart 4: percentage change in small
business employment by state and territory—June 2013 to June 2018
Small business share of jobs in
Australia
Table 3: jobs by firm size in
Australia, 2012–13 and 2016–17
Small business contribution to
national industry value added
Table 4: small business share of
private sector Industry Value Added (IVA) (per cent)
Chart 5: industry value added by small
businesses
Wage outcomes for employees of small,
medium and large businesses
Table 5: average annual wages for
employees of small, medium and large businesses—2008‑09, 2012–13 and
2017–18
Table 6: contract status of employees
working for small, medium and large businesses in 2015
Table 7: median employment income per
job by firm size—2012–13 and 2016–17
Conclusion
Introduction
This statistical snapshot provides the
most recent information available on the contribution of the small business
sector to the Australian economy using key economic indicators such as
employment, wages and salaries, and Industry Value Added (IVA).[3]
What is a small business?
In this statistical snapshot we use the
Australian Bureau of Statistics (ABS) definition of a small business which
includes:
- non‑employing businesses (sole
proprietorships and partnerships without employees)
- micro‑businesses (businesses employing
between 1 and 4 people including non‑employing businesses)
- other small businesses (businesses that employ
between 5 and 19 employees).
The ABS defines a medium-sized business as
employing between 20 and 199 employees and large businesses as employing 200 or
more employees.[4]
Industry scope of the ABS survey
Employment estimates by firm or business size are published
by the ABS annually as part of the Australian Industry publication. The
employment estimates are derived using a combination of data collected directly
from the annual Economic Activity Survey (EAS) conducted by the ABS, and
Business Activity Statement (BAS) data provided by businesses to the Australian
Taxation Office (ATO).
The data includes business entities operating in the
Australian economy apart from those that are classified as:
- General government. Only private sector businesses located
in the industry divisions of Public administration and safety, Education and
training, and Health care and social assistance are included. However, general
government businesses classified as part of Water supply, sewerage and drainage
services are included.
- Finance, Insurance and superannuation funds, and Auxiliary
finance and insurance services within the private sector.
- Public administration, Defence, and Private households employing
staff, and undifferentiated goods-producing and service-producing activities of
households for their own use.
Key findings
Small business contribution to Australian private sector
employment
There were just under 5 million people employed in small
businesses at the end of June 2018, composed of just over 3 million employees
in ‘micro firms’, and around 1.9 million employed in ‘other small businesses’. Chart
1 shows the steady increase in small business employment from 4.6 million in June
2013 to around 5 million in June 2018.
Chart 1: small
business employment in Australia—2009 to 2018
Source: ABS, Australian Industry, cat. no. 8155.0
Table 1 shows changes of private sector employment in
selected industries by firm size in Australia between June 2009 and June 2018.
Employment in the small business sector grew by 369,000 or
8.1 per cent in the period between June 2013 and June 2018. By comparison
employment in medium-sized and larger private sector businesses grew by 87,000
(or 3.3 per cent) and 163,000 (or 4.8 per cent) respectively.
Growth in small business employment was much more pronounced
in the 12 months to June 2018 compared with earlier years—up by 188,000 (or 4.0
per cent), which compares with growth of 68,000 (or 2.6 per cent) for
medium-sized firms in this 12 month period and 80,000 (or 2.3 per cent) for
large firms.
Employment in small businesses grew at almost twice the
annual average growth rate of large businesses between June 2013 and June 2018
(1.6 per cent compared with 0.9 per cent).
Employment in small businesses accounted for just under 60
per cent of total employment growth in the private sector during this five year
period and 56 per cent of employment growth in the 12 months to June 2018.
Table 1: change
in employment in small, medium and large businesses—June 2009 to June 2018
| |
Business size |
| Small |
Medium |
Large |
Total |
| June 2009 |
4,556,000 |
2,333,000 |
2,920,000 |
9,809,000 |
| June 2010 |
4,731,000 |
2,337,000 |
2,988,000 |
10,056,000 |
| June 2011 |
4,781,000 |
2,558,000 |
3,197,000 |
10,535,000 |
| June 2012 |
4,626,000 |
2,734,000 |
3,312,000 |
10,672,000 |
| June 2013 |
4,571,000 |
2,607,000 |
3,381,000 |
10,558,000 |
| June 2014 |
4,589,000 |
2,612,000 |
3,376,000 |
10,578,000 |
| June 2015 |
4,725,000 |
2,495,000 |
3,422,000 |
10,642,000 |
| June 2016 |
4,687,000 |
2,495,000 |
3,473,000 |
10,656,000 |
| June 2017 |
4,752,000 |
2,626,000 |
3,464,000 |
10,841,000 |
| June 2018 |
4,940,000 |
2,694,000 |
3,544,000 |
11,177,000 |
| Change—June 2017 to June 2018 |
188,000 |
68,000 |
80,000 |
336,000 |
| Change—June 2017 to June 2018 (per cent) |
4.0 |
2.6 |
2.3 |
3.1 |
| Share of growth—12 months to June 2018 (per cent) |
56.0 |
20.2 |
23.8 |
100.0 |
| Change—June 2013 to June 2018 |
369,000 |
87,000 |
163,000 |
619,000 |
| Change—June 2013 to June 2018 (per cent) |
8.1 |
3.3 |
4.8 |
5.9 |
| Average annual growth—June 2013 to June 2018 (per cent) |
1.6 |
0.7 |
0.9 |
1.1 |
| Share of total growth—June 2013 to June 2018 (per cent) |
59.6 |
14.1 |
26.3 |
100.0 |
Source: ABS, Australian Industry, cat. no. 8155.0, (Parliamentary Library calculations)
Chart 2 shows the small business share of total private
sector employment has been relatively stable in the period between 2013 and
2018—ranging between 43 and 44 per cent. However, the small business share was
as high as 46 per cent in 2009.
Chart 2: composition
of private sector employment in Australia by firm size
Source: ABS, Australian Industry, cat. no. 8155.0, Table 5
Small business
employment by state and territory
Tasmania had the largest small business share of total
private sector employment in June 2018 (at 47.3 per cent), while Northern
Territory had the smallest small business share (at 38.2 per cent) (see Chart 3).
Chart 3: small business share of total private sector employment—June 2018
Source: ABS, Australian Industry, cat. no. 8155.0, customised table
The Australian Capital Territory (ACT), New South Wales,
Victoria, Tasmania and Queensland all recorded strong growth in small business
employment between June 2013 and June 2018. In contrast, Western Australia, the
Northern Territory and South Australia all recorded contractions in small
business employment over the same five year period (see Table 2).
Table 2: small
business employment by state and territory—June 2013 and June 2018
| State/Territory |
June 2013 |
June 2018 |
Change—June 2013 to
June 2018 |
| ‘000 |
% |
| New South Wales |
1,519,000 |
1,721,000 |
202,000 |
13.3 |
| Victoria |
1,134,000 |
1,251,000 |
117,000 |
10.3 |
| Queensland |
893,000 |
973,000 |
80,000 |
9.0 |
| South Australia |
300,000 |
293,000 |
-7,000 |
-2.3 |
| Western Australia |
527,000 |
489,000 |
-38,000 |
-7.2 |
| Tasmania |
87,000 |
96,000 |
9,000 |
10.3 |
| Northern Territory |
44,000 |
42,000 |
-2,000 |
-4.5 |
| ACT |
66,000 |
76,000 |
10,000 |
15.2 |
| Australia |
4,571,000 |
4,940,000 |
369,000 |
8.1 |
Source: ABS, Australian Industry, cat. no. 8155.0, customised table
The ACT and New South Wales recorded the strongest growth small
business in employment (at 15.2 per cent and 13.3 per cent respectively)
between 2013 and 2018 while Western Australia experienced the strongest
contraction (at 7.2 per cent) (see Chart 4).
Chart 4: percentage
change in small business employment by state and territory—June 2013 to June
2018
Source: ABS, Australian Industry, cat. no. 8155.0, customised table
These figures might be explained by the New South Wales,
Victoria, Tasmania and the ACT having the best performing economies in recent
years. In contrast, the economies of Western Australia and the Northern
Territory have experienced much more subdued economic performance—due in part
to the slowdown in mining investment. Both Western Australia and the Northern Territory
are also experiencing lower rates of population growth, housing finance
commitments, and dwelling construction relative to the decade average.[5]
Growth in small business employment in the ACT is likely to
have been influenced by downsizing and restructuring within the Australian
Public Service which has created opportunities for private firms through
contracting out of services. ABS data from the Labour Force survey shows
private sector employment in the ACT grew by 18,600 or 13.9 per cent in the four
year period between August 2014 and August 2018 which contrasts with a decrease
in public sector employment of 2,400 or 3.1 per cent.[6]
Data from the ABS Labour
Account shows the number of jobs filled in the private sector increased
nationally by 1,097,000 or 10.1 per cent to 12.0 million in the four years to
September 2018. During the same period jobs filled in the public sector
increased by 188,500 or 9.9 per cent. The private sector accounted for 85.8 per
cent of total jobs filled in this four year period.
More recently, in the 12 months to September 2019 the number
of jobs filled in the economy increased by 343,400 or 2.4 per cent, with the
private sector accounting for 96.9 per cent of this growth.[7]
Small business
share of jobs in Australia
ABS Jobs
in Australia data shows the contribution of the small business sector to jobs
in the Australian economy. The data is sourced from the Linked Employer
Employee Dataset (LEED) which provides insights into all jobs held throughout
the year. A person can have a number of jobs throughout the year with one or
many employers, some of which may be held concurrently with others. The LEED
includes person and employer level information provided to the ABS by the
Australian Taxation Office (ATO) and the Registrar of the Australian Business
Register (ABR).[8]
There were around 5.6 million jobs held throughout the year
in the small business sector in 2016‑17 (latest available data), compared
with 4.9 million in 2012–13. Jobs were fairly evenly split between
micro-businesses and firms employing between five and 19 employees (at around 2.8
million each in 2016–17).
The number of jobs in the small business sector in 2016-17
was 724,000 (or 14.9 per cent) higher than the number of jobs in 2012–13. By
comparison, the number of jobs in medium-sized firms in 2016-17 was 219,000 higher
(or 5.5 per cent) than in 2012-13 and the number of jobs in large firms was
322,000 higher (or 4.3 per cent).
This data source shows small businesses accounted for 57.2
per cent of total jobs growth between 2012–13 and 2016–17. Medium–sized
businesses contributed 17.3 per cent and large businesses contributed 25.5 per
cent. Small businesses accounted for 31.8 per cent of all jobs held in 2016–17
which compares with their 29.8 per cent share in 2012–13 (see Table 3).
The ABS Jobs in Australia series includes jobs in all
industries, including public sector jobs held in Public administration and
safety, Education and training and Health care and social assistance. These
industry sectors are excluded from the ABS Australian Industry data.
Public sector employees are more likely to work in medium
and large organisations than private sector employees. The inclusion of these
employees contributes to a lower small business share of total jobs held by
employees (at 31.8 per cent) in 2016–17 than the estimate of 43.8 per cent for
the small business share of total private sector employment in 2016–17.
Table 3: jobs
by firm size in Australia, 2012–13 and 2016–17
| Firm size |
Number of jobs |
Growth in jobs |
| 2012–13 |
2016–17 |
2012–13 to 2016–17 |
| ‘000 |
Share of total (per
cent) |
‘000 |
Share of total (per
cent) |
Change (‘000) |
Per cent change |
Share of total change
(per cent) |
| Fewer than 5 employees |
2,410.2 |
14.8 |
2,805.0 |
15.9 |
394.7 |
16.4 |
31.2 |
| 5-19 employees |
2,455.9 |
15.0 |
2,785.2 |
15.8 |
329.3 |
13.4 |
26.0 |
| Total small |
4,866.2 |
29.8 |
5,590.2 |
31.8 |
724.0 |
14.9 |
57.2 |
| Medium |
3,975.1 |
24.3 |
4,194.3 |
23.8 |
219.2 |
5.5 |
17.3 |
| Large |
7,483.6 |
45.8 |
7,805.8 |
44.4 |
322.2 |
4.3 |
25.5 |
| TOTAL |
16,324.9 |
100.0 |
17,590.3 |
100.0 |
1,265.4 |
7.8 |
100.0 |
Source: ABS, Jobs in Australia, cat. no. 6160.0, Table 1.1
Small
business contribution to national industry value added
Table 6 provides a breakdown of the contribution of small,
medium and large businesses to Industry Value Added (IVA) for selected
industries between 2010–11 and 2017–18. There is a fairly consistent pattern
over the eight year period in terms of contributions from small, medium and
large businesses to IVA. Over the eight year period small businesses accounting
for between 33 and 35 per cent of IVA in selected industries of the private
sector (see Table 4).
Table 4: small
business share of private sector Industry Value Added (IVA) (per cent)
| |
2010-11 |
2011-12 |
2012-13 |
2013-14 |
2014-15 |
2015-16 |
2016-17 |
2017-18 |
| Small |
34.6 |
34.0 |
33.4 |
33.0 |
35.6 |
34.5 |
34.5 |
34.2 |
| Medium |
22.8 |
22.8 |
22.5 |
22.5 |
21.5 |
21.8 |
22.1 |
21.6 |
| Large |
42.6 |
43.2 |
44.0 |
44.5 |
43.0 |
43.8 |
43.4 |
44.2 |
| TOTAL |
100.0 |
100.0 |
100.0 |
100.0 |
100.0 |
100.0 |
100.0 |
100.0 |
Source: ABS, Australian Industry, cat. no. 8155.0, Table 5 (Parliamentary Library calculations)
Chart 5 shows IVA in the small business sector was $414
billion in 2017-18 which compares with $335 billion in 2012-13—an increase of
$79 billion or 24 per cent.
Chart 5: industry
value added by small businesses
Source: ABS, Australian Industry, cat. no. 8155.0, Table 5
Wage
outcomes for employees of small, medium and large businesses
Employees of smaller firms receive on average lower average annual
wages and salaries than employees of medium–sized and large–sized firms. However,
growth in annual average wages for employees of smaller firms has been stronger
in the five years to 2017-18 (at 3.7 per cent per annum) than growth in annual
average wages for employees of medium and larger firms (at 2.7 per cent and 1.5
per cent respectively) (see Table 5).
Table 5: average
annual wages for employees of small, medium and large businesses—2008‑09,
2012–13 and 2017–18
| Firm size |
Average annual wages
($) |
Average annual
growth in wages (%) |
| 2008-09 |
2012-13 |
2017-18 |
2008-09 to 2012-13 |
2012-13 to 2017-18 |
| Small |
25,495 |
28,100 |
33,657 |
2.0 |
3.7 |
| Medium |
47,811 |
51,109 |
58,216 |
1.3 |
2.7 |
| Large |
56,795 |
66,516 |
71,695 |
3.2 |
1.5 |
| TOTAL |
40,120 |
46,091 |
51,641 |
2.8 |
2.3 |
Source: ABS, Australian Industry, cat. no. 8155.0, Table 5 (Parliamentary Library calculations)
Note: These figures do not account for hours worked. There
could be a much larger share of employees in small businesses in the ABS data that
are working part-time hours (fewer than 35 hours per week) than in medium and
large firms which may contribute to lower average wage outcomes. This data
source does not provide a breakdown of hours worked or employee status. By way
of comparison the ABS Wage Price Index (cat.
no. 6345.0) grew by an annual average of 2.2 per cent in the five years to June
2018 and by an annual average of 3.4 per cent in the four years to June 2009.
Average annual wages for employees of small businesses were
consistently less than half the wage of an employee of large businesses between
2008–09 and 2017–18. Average wages are calculated by dividing gross wages and
salaries paid by businesses by the number of employed persons.[9]
Employees of small businesses are more likely to work
part-time hours than employees of medium–sized and larger firms. Analysis of Household
Income and Labour Dynamics in Australia (HILDA) data for 2015 shows just under
40 per cent of respondents who worked for smaller firms worked part-time which
compares with a third of people working in medium sized firms and 22 per cent
of people who worked in large firms at this time.[10]
Smaller firms are also much more likely to hire casual
employees than medium and large sized firms. HILDA data shows around a third of
respondents who worked in smaller firms worked on a casual basis in 2015
compared with a fifth of people who worked in medium-sized firms and just over
9 per cent of employees of large-sized firms (see Table 6).
Table 6: contract
status of employees working for small, medium and large businesses in 2015
| Firm size |
Employee contract
status |
| Fixed-term contract |
Casual |
Permanent |
Total |
| Small (per cent of total) |
6.8 |
33.3 |
59.9 |
100.0 |
| Medium (per cent of total) |
10.0 |
20.0 |
69.9 |
100.0 |
| Large (per cent of total) |
12.5 |
9.4 |
78.1 |
100.0 |
| TOTAL (per cent of total) |
9.5 |
22.3 |
68.2 |
100.0 |
Source: Household Income and Labour Dynamics in Australia
(HILDA), 2015 (Parliamentary Library calculations)
ABS data is also available for duration adjusted[11]
median[12]
employment income per job by firm size. The data shows median employment income
for jobs in small businesses is consistently lower than the median for medium
and large businesses between 2012–13 and 2016–17. Again these data are not
adjusted for hours worked by employees.
Growth in median employment per job between 2012–13 and
2016–17 was highest for firms employing fewer than five employees (at 2.9 per
cent per annum). In contrast, median employment income for employees of large
firms grew at an annual average of 2.1 per cent, which is below the average of
2.2 per cent for all employees (see Table 7). According to the ABS Wage Price Index
data (cat. no. 6345.0), wages in Australia grew at an annual average of 2.2 per
cent between June 2013 and June 2017.
Table 7: median
employment income per job by firm size—2012–13 and 2016–17
| Firm size |
2012–13 |
2016–17 |
2012–13 to 2016–17 |
| Current dollars |
Current dollars |
Change (dollars) |
% change for whole period |
Average annual change
(%) |
| Fewer than 5 employees |
25,000 |
28,000 |
3,000.0 |
12.0 |
2.9 |
| 5-19 employees |
29,361 |
32,616 |
3,255.4 |
11.1 |
2.7 |
| Medium |
37,129 |
40,618 |
3,489.0 |
9.4 |
2.3 |
| Large |
49,648 |
54,009 |
4,361.2 |
8.8 |
2.1 |
| TOTAL |
39,555 |
43,189 |
3,634.4 |
9.2 |
2.2 |
Source: ABS, Jobs in Australia, cat. no. 6160.0, Table 1.1
Note: The data refers to duration adjusted median employee
income per job for all employees excluding Owner Managers of
Unincorporated Enterprises (OMUEs). An aggregated estimate for median
employment income per job was not available for total small businesses (i.e.
the combination of those employing fewer than five employees and those employing
between five and 19 employees).
Conclusion
The small business sector continues to make a strong
contribution to the Australian economy, accounting for a substantial share of
total private sector employment growth between June 2013 and June 2018 and jobs
growth between 2012-13 and 2016-17.
Small businesses contributed a smaller share of IVA compared
with their share of total employment commensurate with their smaller scale and
productive capacity. Employees of small firms also tend to be paid less on
average than their counterparts in medium and large sized businesses which may
be related to their greater use of casual and/or part-time employees.
The change in small business employment in various states
and territories between 2013 and 2018 is likely to be related to differences in
regional economic performance.
[1]
The data excludes private sector industries such as Finance, insurance and
superannuation funds and Auxiliary finance and insurance services. For general
government, the data only covers private sector businesses located in Public
administration and safety, Education and training and Health care and social
assistance. General government businesses classified as part of Water supply,
sewerage and drainage services are also included.
[2]
An employed person can have a number of jobs over a 12 month period and may
have multiple jobs at a point in time. Jobs growth measures the change in the
number of jobs in the Australian economy over a period of time whereas
employment growth measures the change in the number of employed persons.
[3]
Industry Value Added (IVA) is an estimate of the difference between the
market value of the output of an industry and the purchases of materials and
expenses incurred in the production of that output.
[4]
ABS, Australian Industry, cat. no. 8155.0, Glossary
[5]
Commsec, State of the
States Report
[6]
ABS, Characteristics of Employment, cat. no. 6330.0, using TableBuilder.
[7]
ABS, Labour Account Australia, Quarterly Experimental Estimates, cat. no.
6150.0.55.003.
[8]
ABS, Australian Industry, Explanatory
Notes.
[9]
Wages and salaries includes severance, termination and redundancy payments,
salaries and fees of directors and executives, retainers and commissions of
persons who received a retainer, bonuses, and annual and other types of leave.
Provision expenses for employee entitlements (e.g. provisions for annual leave
and leave bonus, long service leave, sick leave, and severance, termination and
redundancy payments) are also included, as are salary sacrificed earnings and
remuneration of employees in the form of share based payments and stock options.
[10]
Parliamentary Library calculations using HILDA data for 2015.
[11]
Duration adjusted income takes accounts of the length of time an employee job
was held. Duration adjusted income divides regular payments by the number of
days the job was held, and then multiplies this figure by the number of days in
the reference year.
[12]
Median employment income per job is a mid-point measure of the employment
income received as a result of a single job.
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